Grayscale trust sales are increasing in the cryptocurrency markets. Digital Currency Group (DCG), a venture capital firm that focuses on the cryptocurrency market, is also seeing a decline. It was stated that the reason for this was the outflow of investors due to the increase in fear of bankruptcy.
There is a decline in the number of cryptocurrency investors
Grayscale’s Bitcoin Trust (GBTC) is trading at $8.75 per Bitcoin, compared to BTC’s current market cap of $16,764. In the last 24 hours, there is a 4.89 percent decrease. Similarly, Ethereum Trust (ETHE) is down 0.98 percent, currently trading at $7.06. Notably, both show significant investor decline. Also, speculation arose with what happened and spoken at Genesis Trading and Grayscale’s parent company, Digital Currency Group. The bankruptcy rumors circulating after the FTX incident caused fears to increase.
As we have reported as Kriptokoin.com; With all this, many organizations, including the cryptocurrency exchange Gemini, are in a state of panic. It is known that Genesis Trading, which provides support to Gemini, is currently going through a liquidity crisis. It is also worth noting that withdrawals are suspended.
The echoes of FTX continue
The firm had $175 million locked in cryptocurrency exchange FTX, which went bankrupt last week. However, DCG engaged in an equity settlement of $140 million last Friday, according to a report provided. It also continued to stop withdrawals this week. As a result, however, it does not seem to have been enough to keep the lender afloat.
According to the Wall Street Journal report, Genesis is trying to raise $1 billion by Monday to meet customer demands. According to the report, the liquidity crisis stems from the illiquid assets on its balance sheet. As a result, users began to question what happened at DCG.
Is DCG at risk?
Hal Press, the founder of North Rock Digital, made a statement on his Twitter account. He believes concerns about the required $1 billion request are valid. Hal Press says it believes DCG has full responsibility:
I believe the responsibility lies with DCG and DCG is now at risk. It’s also unclear if they’re valuable enough to raise 1B until Monday. I think that’s the problem. What a mess.
Twitter user 0xSisyphus especially drew attention to the issue. In the worst case, he stated, the company has a void it can’t fill. He also says that if this continues, he may have no choice but to dissolve Bitcoin and Ethereum trusts. Specifically, pursuant to Form 10-K that Grayscale has submitted to the SEC, shareholders can receive a distribution in USD or cryptocurrency if the Trust is dissolved. However, it is stated that this decision is at the discretion of the sponsor.
If there is a decision that will be precedent, it is likely that there will be a spread in USD from the sale of cryptocurrencies. For example, as one user noted, Grayscale liquidated its XRPs when the SEC terminated its XRP trust throughout its lawsuit against Ripple. It then distributed cash income to shareholders. According to Coinglass data, Grayscale holds approximately 633.7 thousand BTC ($ 10.57 billion). It is holding 3.05 million ETH ($3.68 billion) excluding BTC. As a result, an exit is likely to spell disaster for the cryptocurrency market.
Cryptocurrency analysts commented
However, several crypto experts consider this outcome unlikely. Analyst Alex Kruger states that such an action would also harm DCG. He then claims that it is not in the company’s interest to do so. Meanwhile, Financial Times Crypto editor Jeff Roberts shared his thoughts. According to Roberts, the regulatory hurdles of dissolving the Trust could be very severe, he says. Instead, he stated that he believes the company can sell crypto media platform CoinDesk to raise capital when needed.
News and developments regarding the FTX infection continue to emerge. It is certain that the news will resonate for a while.
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